Axiom Telecom, a mobile phone retailer based in Dubai, plans to sell up to 35 per cent of its shares to the public this year, the first initial public offering (IPO) in the Emirates in more than 18 months. The listing on NASDAQ Dubai will be the first real test of investor appetite this year and, if successful, might encourage other companies to list, analysts say.
Faisal al Bannai, the founder and chief executive of Axiom, said it was "great timing for the company". The retailer, which has more than 600 stores across the Gulf, India and the UK, has worked to streamline itself in recent years, he said. From an equity point of view, the market was in recovery, particularly over the past couple of months, he said. "I don't think at the end of the day there is a lack of money in the market," he said. "There is a lack of confidence and a lack of availability of the right investments … There are not many companies in the market that offer investors access to consumers and access to the retail part of this market."
Last year, Axiom had revenue of Dh5 billion (US$1.36bn). In the first six months of this year, it had revenue of Dh3bn. Axiom is 40 per cent owned by Dubai Holding Commercial Operations Group (DHCOG), a company owned by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai. DHCOG is the parent company of the Jumeirah Group, a hospitality business that owns Dubai's Burj Al Arab luxury hotel, and TECOM Investments, which owns and operates several economic free zones in the emirate.
Mr al Bannai said it was too early to determine how much the IPO would raise but that Axiom planned to list up to 35 per cent of its shares on NASDAQ Dubai. Marwan Shurrab, the vice president, assistant fund manager and chief trader at Gulfmena Alternative Investments, said Axiom was an attractive company and would be priced moderately compared with its peers in the market. "It would get a lot of attention from investors, whether regionally or internationally, to allocate to such an IPO," he said. "It would have been more favourable, especially for the region here, if it would list on the Dubai Financial Market [DFM]. Due to the fact that it is [listing] on NASDAQ Dubai, this is where more international presence is needed and marketing for international clients is required."
Another concern with listing on NASDAQ Dubai is low trading volumes, with the exception of DP World's shares. Mr al Bannai said NASDAQ was chosen in part because of its recent merger with the DFM, which would give Axiom access to about 500,000 retail investors. "But what is more important for me, looking at the profile of the companies at NASDAQ Dubai and our profile … we are a very strong brand in the region in this regard, and having such a strong growth story, we feel very confident many investors will be interested."
Mr Shurrab said it was too early to tell whether Axiom's move signalled an increased interest among companies to sell shares. "It's going to depend on the appetite the IPO receives," he said. "If the IPO for any reason does not receive appropriate appetite, it would not encourage other companies to IPO at the current time. But if it does, and it's oversubscribed in a good way, that would encourage other companies to start tapping into the market."
Analysts have said there is a long list of companies that would like to raise money by selling shares to the public. Their plans were put on hold until markets recovered and would be able to offer fair valuations for the shares. Nawras, an Omani telecommunications company, said this month it hoped to raise up to 234 million rials (Dh2.22bn) in the first public listing of a company in the sultanate since 2008. But this week, Nawras extended its offering period by one week until next Thursday, prompted by weak retail demand.
Mr al Bannai would not comment on Nawras but said he was "confident" about Axiom's flotation. "This IPO is happening in the UAE, and it's a different market than Oman. At the end of the day, depending on how we offer it to our institutions and other investors, we feel confident." Axiom is planning a primary offering and secondary share offering by its current shareholders. The mobile phone retailer and telecoms services distributor, which was founded in 1997, is 53 per cent owned by Al Bannai Investment. TECOM, a part of Dubai Holding, owns 40 per cent, and 7 per cent is owned by Al Zarouni Enterprises.
The money raised will go towards working capital, paying a portion of Axiom's existing bank debt and funding its expansion across the region and into new markets. email@example.com